A patent troll takes a punch on the nose, but there are still (too) many

Patent trolls function as one of the worst cancers on innovation. These companies, which don’t actually produce any tech products, wield (suspect) patents and search out any firm, large or small, that might infringe on said-patents and threaten to take them to court. Most times they know they don’t have a case and settle before a trial. The accused companies typically find it’s easier to pay a lower amount — often called “nuisance fees” — than suffer the legal fees and time-wasting of a court case.

Now Joe Mullin at Ars Technica reports that one entrepreneur is fighting back harder than usual. FindTheBest CEO Kevin O’Connor claims that the troll that’s come after his company has been so brazen that it’s actually violated racketeering laws.

O’Connor, who also cofounded digital ad agency DoubleClick, which Google bought for the tidy sum of $3.1 billion, pledged a million dollars to help fight this troll. In July he penned a piece called “How to slaughter a patent troll in 5 steps” and reminded tech companies:

You are fighting for the entity you have poured your time and resources into. You’re using technology to solve a problem that you believe in. What is the patent troll fighting for? A settlement worth a few thousand dollars? Your cause is bigger and worth the fight.

Big names are starting to take the fight back to the trolls. Rackspace launched a public attack on a notorious patent troll earlier this year to defend Hadoop, an opensource software project integral to its business.

The state of patents in technology is nothing short of a disgraceful mess. And patent fights certainly aren’t just between tech companies and trolls. Tech companies bring patent litigation against one another as well. Apple, Samsung, Oracle, Microsoft and Google’s Motorola Mobility have all been involved in cases, typically having to do with smartphone technology. Companies like Twitter have pledged patent litigation truces but they certainly aren’t legally binding.

Google itself has been expanding search functionality into patents with a specified search bar for the patent records and Prior Art Finder, which searches for related patents, since many claims are dependent on others.

The technical term for patent trolls is a “non-practicing entity” (NPE), meaning a firm that holds the intellectual property rights but doesn’t use them for any particular product. A 2012 study from Boston University’s school of law estimates that firms racked up $29 billion in direct costs in 2011 fighting NPEs. Big companies accrued over half that cost, but by when looking at the total number of defendants involved in cases most were small- or medium-sized firms, “indicating that NPEs are not just a problem for large firms,” the study points out.

Lumen View has filed 21 lawsuits in New York and Delaware. The company’s initial demand to FindTheBest was $50,000, but that would explode to $85,000 if it fought back at all, filing any motion in court whatsoever. Then FindTheBest was offered a “one-day-only” settlement offer, discounted by $30,000 if they would avoid filing an answer.

At some point, it became clear that t(Lumen View’s lawyer of record Damian Wasserbaur) just wants to collect a check without doing anything. “It was clear Damian ] only wanted to talk about the settlement,” said O’Connor. “He refused to tell us how we were infringing. Every sentence ended in, let’s settle.

Perhaps not coincidentally, $50,000 is just about what it costs to hire a lawyer and file the initial set of paperwork to defend a patent case, noted O’Connor.”

The patent troll problem also points back to United States Patent and Trademark Office. For years the office has been criticized for approving too many applications on suspect inventions. The patent in question for O’Connor’s case covers the almost-hilariously vaguely worded “computer-implemented method for facilitating evaluation, in connection with the procurement or delivery of products or services, in a context of at least one of (i) a financial transaction and (ii) operation of an enterprise…”

Often times a court will dismiss a patent during a trial, but this is not before legal costs have mounted. In June the White House signaled it’s aware of the problem and is taking steps, though action since then has been discouragingly light.